The New York Attorney General (NYAG) has secured a significant victory with the court approval of a settlement involving Genesis. This landmark settlement will establish a fund for New Yorkers who invested more than $1.1 billion in Genesis through the Gemini Earn program, effectively barring Genesis from operating within the state.

Court Approves $2 Billion Settlement Between Genesis and NYAG

In a crucial development, the office of the NYAG announced that a state court had greenlit a $2 billion settlement with the bankrupt crypto lender Genesis. This settlement is a part of the NYAG’s lawsuit filed in October 2023 against Genesis, Gemini, and Digital Currency Group (DCG) for allegedly defrauding over 230,000 investors, including 29,000 New Yorkers.

Read more: Genesis to Return $3B in Customer Assets Under Finalized Bankruptcy Plan

The Allegations and Settlement Details

The NYAG’s lawsuit claimed that Gemini was aware that Genesis’ loans were undersecured and concentrated with Alameda Research but failed to disclose this critical information to investors. This lack of transparency led to significant financial losses for many.

“This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice,” stated Attorney General Letitia James. “Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry.”

Implications for Genesis

As part of the settlement, Genesis will neither admit nor deny the allegations. However, it will be prohibited from conducting business in New York. This move is seen as a significant blow to Genesis, which has been under intense scrutiny since the lawsuit’s filing.

Digital Currency Group’s Objections

Digital Currency Group, initially part of the lawsuit but excluded from the settlement, had previously raised objections. In February, DCG argued that Genesis’ proposed settlement unlawfully redistributed value to preferred creditors, sidestepping the principles of U.S. bankruptcy law.

Genesis to Return $3 Billion in Customer Assets

In related news, Genesis recently announced its plan to return $3 billion worth of customer assets as part of a bankruptcy liquidation plan approved by the courts. This amount represents approximately 77% of the total value of customer claims, marking a significant step in addressing the financial damage caused by the company’s practices.

Establishing the Victims’ Fund

A critical component of the settlement is the establishment of a Victims’ Fund. This fund will receive up to $2 billion from Genesis’ remaining assets after initial bankruptcy distributions. The aim is to compensate creditors for their outstanding losses, providing some relief to those affected by the fraudulent activities.

Finally,

The court-approved settlement between Genesis and the NYAG represents a monumental step in holding cryptocurrency firms accountable and protecting investors. While the road to recovery for the affected investors is long, the establishment of the Victims’ Fund and the return of customer assets are significant milestones in ensuring justice and financial restitution. This case underscores the urgent need for increased regulation and oversight within the cryptocurrency industry to prevent similar occurrences in the future.